Increasing concerns about damage from drought and frosts in Russia, the world’s biggest wheat supplier, drove Chicago board of Trade wheat futures to 10-month highs in May while EU wheat topped one-year highs.

CBOT wheat Wv1 pared losses after the USDA reduced its estimates in a monthly report.

The USDA pegged Russia’s 2024-25 wheat harvest at 83 million metric tons, down from 88 million tons last month, and its exports at 48 million tons, down from 52 million in May.

“Hot and dry weather lowered yield prospects following May frosts,” the USDA said.

The department projected global wheat ending stocks for 2024-25 at a nine-year low of 252.27 million metric tons, down from 253.61 million in May. Analysts expected 251.18 million, according to a Reuters survey.

May frosts in Russia’s breadbasket regions already caused agricultural consultancies IKAR and Sovecon to downgrade their crop forecasts for this year’s wheat crop.

For the United States, the USDA projected all-wheat production at 1.875 billion bushels, compared to 1.858 billion in May and analysts’ estimates for 1.88 billion.

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Harvest progress was up from 81 per cent the previous week — and from the five-year average of 82 per cent.

While only trace amounts of rain were reported, heavy morning fogs and high humidity were causing delays in some areas with harvest activities pushed back to the afternoon. Grain moisture levels were higher than normal.

Harvest in the southwest and west-central regions was virtually complete with mostly flax waiting to be harvested, which will likely occur after the next heavy killing frost. The northwest has 94 per cent of its crop off, the northeast 87 per cent, southeast 86 per cent and east-central region 81 per cent.

The harvest of lentils and field peas was finished. Durum was 98 per cent combined, while 97 per cent of the chickpeas, 93 per cent of the spring wheat, 90 per cent of the barley, 82 per cent of canola and 66 per cent of the flax was harvested across the province.

All areas of the province were reporting that they were either extremely dry or becoming drier each week. This includes the southeast and east-central regions, which started the season with an abundance of moisture.

Cropland topsoil moisture was rated as 28 per cent adequate, 41 per cent short and 31 per cent very short. Hay and pastureland topsoil moisture was rated as 22 per cent adequate, 41 per cent short and 37 per cent very short.

The limited moisture throughout much of the harvest season has allowed crop quality to remain high, especially hard red spring wheat, which was being reported as 75 per cent No. 1 CW, 23 per cent No. 2 CW and two per cent No. 3 CW.

The majority of crop damage during the week was due to wind, waterfowl and wildlife. Wind continues to impact unharvested crops by blowing swaths around, as well as shelling out crops and causing lodging.

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The southern half of the country is now faced with wet conditions, while the north is forced to contend with widespread dryness.

“The Brazil national weather service today declared that the dry season has started. There are areas of central Brazil that have been dry for 20 to 30 days, some even longer than that,” Cordonnier said Monday from his Hinsdale, Ill. office.

He estimated about 30 to 40 per cent of Brazil’s safrinha (or second) corn crop is at various stages of dryness. As for the soybean crop, he said it has been “disappointing from the get-go and isn’t going to change much going forward” being 85 to 90 per cent harvested.

Coupled with that dryness, Cordonnier pointed to the growing threat of frost. He said there have been three overnight frosts so far in the higher elevations of southern Brazil.

“If it keeps staying cold like this, with the frost coming and going, the possibility is a frost could impact the safrinha corn,” Cordonnier warned, noting such a situation occurred last year.

In CONAB’s monthly outlook released April 7, the agency pegged total corn production in Brazil at 115.6 million tonnes, for a 2.9 per cent increase from its March report. Also, in supply and demand estimates issued by the U.S. Department of Agriculture on April 8, it estimated total Brazil corn production at 116 million tonnes. That was a 1.75 per cent increase from its March report.

With the reversal of conditions in Brazil and cold, wet conditions in North America, Cordonnier said there could be a lot of movement in the commodities market.

“Any hiccup in Brazil or in the U.S. could make the markets more volatile,” he said.

— Glen Hallick reports for MarketsFarm from Winnipeg.

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Transportation and Infrastructure Minister Doyle Piwniuk said the amount of flooding will depend on weather conditions from now until spring melt.

The HFC advised that, while there is a risk of major flooding along the Red River and its tributaries, including the Roseau, Rat and Pembina rivers, water levels are expected to remain below community flood protection levels at all locations.

There’s also a risk of moderate flooding for most other southern Manitoba basins, including the Assiniboine and Souris rivers and the Whiteshell lakes area, the centre said, while the risk of spring flooding is low for the Interlake region and northern Manitoba regions.

The HFC also said the operation of the Red River Floodway is expected this spring in order to reduce water levels within Winnipeg — and some operation of the Portage Diversion is anticipated to prevent ice jamming on the Assiniboine River.

Prior to this winter, normal to below-normal summer and fall precipitation resulted in a below-normal soil moisture freeze-up for most Manitoba basins, according to the HFC. However, snowfall throughout much of Manitoba has been above normal, except for the province’s southwest region which has been near normal.

The centre also noted that soil frost depth has been generally deeper than normal, meaning the soil is likely to absorb less water, and that could contribute to greater amounts of runoff.

The province also said its annual ice-cutting program got underway Friday — the main portion being a 28-kilometre long by 100-metre wide stretch on the Red, from Selkirk northward to Netley Marsh. The cutting helps to reduce the chances of ice jams between Selkirk and Lake Winnipeg.

Other cutting sites will be along the Icelandic River at Riverton and at the outlet of the Portage Diversion.

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Wheat futures in the U.S. rose due to spillover from soybeans. However, a stronger Canadian dollar tempered Prairie wheat prices.

Manitoba and Saskatchewan, as well as Montana, North Dakota and Minnesota, all received varying amounts of snow during the week, but not enough to fully alleviate dry conditions across the region. The southern Plains also encountered colder-than-normal temperatures, which threatened frost damage to the winter wheat crop.

CWRS (Canada Western Red Spring, 13.5 per cent protein) wheat prices increased by $4.60-$9.60 per tonne, according to price quotes from a cross-section of delivery points compiled by PDQ (Price and Data Quotes). Average prices were between $283.50 in southeastern Saskatchewan and $304.30 in northern Alberta.

Quoted basis levels ranged between $39.80 and $60.60 above the futures when using the grain company methodology of quoting the basis as the difference between U.S. dollar-denominated futures and Canadian dollar cash bids.

Accounting for exchange rates and adjusting Canadian prices to U.S. dollars, CWRS bids ranged from US$226.30 to US$242.90 per tonne. Currency-adjusted basis levels ranged from 80 U.S. cents to US$17.40 below the futures. If the futures were converted to Canadian dollars, basis levels would be 70 cents to $13.90 below the futures.

Average CPSR (Canada Prairie Spring Red, 11.5 per cent protein) wheat prices followed CWRS’s lead, moving up $12.20-$14.40 per tonne. The lowest average bid was $268.40 in southeastern Saskatchewan, while the highest average bid was $287.90 in northern Alberta.

Average CWAD (Canada Western Amber Durum) prices gained $1-$3.25 per tonne with bids ranging from $309.40 in northeastern Saskatchewan to $316.25 in southern Alberta.

The May spring wheat contract in Minneapolis, off of which most CWRS contracts in Canada are based, was quoted Thursday at US$6.6325 per bushel, 23 U.S. cents higher than the previous week.

Kansas City hard red winter wheat futures, traded in Chicago, are more closely linked to CPSR in Canada. The May K.C. wheat contract was quoted at US6.0775, up 31.25 U.S. cents.

The May Chicago Board of Trade wheat contract was up 25 U.S. cents from the previous week at US$6.5375.

The Canadian dollar gained 0.31 U.S. cent on the week, to close Thursday at 79.81 U.S. cents.

— Adam Peleshaty reports for MarketsFarm from Stonewall, Man.

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Corn followed wheat, climbing to 14-month highs and soybeans ended higher as exports continue.

The most-active wheat contract on the Chicago Board of Trade added 21-1/2 cents to $6.18-1/4 per bushel, the highest since Dec. 29, 2014 (all figures US$).

CBOT corn ended 6-1/4 cents higher at $4.03-3/4 per bushel after reaching $4.04-1/4, its highest since Aug. 12, 2019 and soybeans rose six cents to $10.62-1/4 per bushel.

Argentina’s Rosario grains exchange lowered its estimate of the South American country’s soon-to-be-harvested 2020-21 wheat crop to 17 million tonnes, from 18 million previously, citing dryness and frosts.

“The weather became that much more important, because of the Argentine cut,” said Mike Zuzolo, president of Global Commodity Analytics. “We’ve gotta ration demand now, because we don’t know how bad supply is going to get hit, globally, when we go into dormancy.”

Dryness across Russia’s wheat-producing regions added to emergence concerns in the drought-stricken U.S. Plains, lifting CBOT wheat futures.

“If they get a rain it may come up, but I’ve been talking to clients that say, it’s too far along,” said Jeff French, risk management specialist with Top Third Ag Marketing. “There’s just no relief in sight.”

Meanwhile, China’s Dalian corn futures market rose to six-year highs on Wednesday, creating hope that the country will renew purchases of U.S. corn.

“China can import corn and make a profit,” said Don Roose, president of U.S. Commodities, noting the country would need to lift tariffs first.

Soybeans were supported by export demand from China, despite pressure from rains in South America that improved conditions for newly planted crops.

“They’re kind of canceling each other out, with a bias to the upside,” said Roose.

USDA reported another 261,000 tonnes of U.S. soybean sales to China Thursday morning.

— Reporting for Reuters by Christopher Walljasper; additional reporting by Naveen Thukral and Maytaal Angel.

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“They’re further behind this year because they were later going in,” said Dale McManus, a broker with Johnston Grains at Welwyn, Sask.

Saskatchewan grows over half of Canada’s fababeans, and most are grown around the Yorkton area, where wet weather delayed spring planting. Of the 99,000 acres of fababeans seeded across Canada, Saskatchewan grows about 56,000.

Fababean prices have remained between $7 and $8 per bushel, and prices are staying largely steady due to the lack of harvest pressure.

According to the most recent crop report from the government of Saskatchewan, most crops across the province received a hard frost earlier in the week, which could damage late-maturing crops, though the extent of damage to the fababean crop is not yet known.

— Marlo Glass reports for MarketsFarm from Winnipeg.

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“The farmers who wanted to sell off of the combine or shortly after, probably have done so already,” said Jerry Klassen, an independent Winnipeg commodities trader.

There will still be some pressure yet to come, he said, estimating more than half of the canola across the Prairies has yet to be harvested. He stressed it won’t be as prominent as a few weeks to a month ago.

After frost Tuesday heading into Wednesday, Klassen said there is now a risk premium for canola as there’s a measure of uncertainty regarding its quality. Canola lying in swaths is better able to withstand temperature dips below 0 C than canola that’s still standing, he noted.

In turn, that has raised questions about the quality of the canola remaining to be harvested.

“The crushers can use the lower-quality canola, but it won’t go for export,” Klassen said.

Nevertheless, he said there was still good commercial and speculative demand that was underpinning the market.

Once canola rises past $500 per tonne, he said, it often continues to rally. That’s what happened Tuesday when November canola jumped $7.20, to close at $510.90 per tonne. At one point in that Tuesday session after the Labour Day long weekend, canola was up by more than $10.

While frost certainly played a role in that spike, another trader said it wasn’t the strongest factor.

Ken Ball of PI Financial in Winnipeg pointed to canola lagging well behind its product values and it finally caught up that day. Ball estimated the frost added about $2 to the price of canola.

The weight of those product values was certainly felt Wednesday as most of the previous session’s gains were given back. Soyoil at the Chicago Board of Trade dropped by more than a quarter of a cent, and combined with a stronger Canadian dollar, canola was forced to pull back.

— Glen Hallick reports for MarketsFarm from Winnipeg.

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Wheat futures ended narrowly mixed while corn futures drifted lower in rangebound trade.

Chicago Board of Trade November soybeans settled up 5-3/4 cents at $9.78-3/4 per bushel after reaching $9.81-3/4, the highest price for a most-active soy contract on a continuous chart since June 2018 (all figures US$).

CBOT December wheat ended down 1/2 cent at $5.43-3/4 a bushel and December corn settled down 1-1/2 cents at $3.60-1/4 a bushel.

Soybeans firmed after the U.S. Department of Agriculture confirmed soybean sales to China for a fourth straight business day, announcing sales of 238,000 tonnes to the Asian country and another 132,000 tonnes to unknown destinations.

Cash markets for soybeans firmed at the U.S. Gulf export terminal as business picked up at a time when analysts expect USDA to lower its estimate of U.S. 2020-21 soybean production in monthly reports due on Friday.

“Another day, another (soybean) export sale. We are waiting for Friday’s report to come out and give some indications of a drop in the yields and the tightening of the balance sheets,” said Brian Hoops, analyst with Midwest Market Solutions.

Also, freezing temperatures early Wednesday in North Dakota and northern Minnesota may have damaged crops. Minnesota is the third-largest U.S. soy producer, but most of its acres are in the southern portion of the state, while North Dakota is the No. 10 producer.

“We probably nixed some beans, in North Dakota, anyway,” said Jack Scoville, analyst with the Price Futures Group in Chicago.

CBOT December corn stayed inside of Tuesday’s trading range as brokers awaited Friday’s USDA reports. Analysts expect the government to lower its forecasts of U.S. 2020-21 corn production and ending stocks, but stockpiles should remain relatively plentiful.

Wheat futures consolidated, with the December contract turning lower in late moves to post a fifth straight decline. Strong competition for global export business hung over the wheat market.

“Canada, Australia and Russia are all going to have bigger crops than last year,” Hoops said.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago; additional reporting by Gus Trompiz in Paris and Naveen Thukral in Singapore.

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Corn also slipped, following a pullback in crude oil, while wheat eased as beneficial rain for Northern Hemisphere crops kept pressuring the market.

Prices got some support from fears that damaging frost across the northern United States posed a risk to early-planted corn and soybeans, traders said. The cold northern U.S. weather also offered some support to wheat, which was still being pummeled by strong crop outlooks in Europe and the Black Sea region, traders said.

The most-active soybean contract on the Chicago Board Of Trade ended down seven cents at $8.32-1/2 a bushel (all figures US$).

CBOT corn fell 2-3/4 cents to $3.14-1/4 a bushel. Wheat ticked down 3-1/4 cents to $5.17-1/2 a bushel.

Despite recent purchases from China, the Trump administration’s increasing criticism of the country over its handling of the coronavirus pandemic had equities and commodity markets on edge, according to Ted Seifried, chief ag market strategist of the Zaner Group.

“Pompeo was taking a hard line on China again today, and you saw the markets react almost immediately,” Seifried said, referring to U.S. Secretary of State Mike Pompeo. “If they don’t start buying aggressively soon, the market feeling is this could escalate into Cold War 2.0.”

On Tuesday, the U.S. Department of Agriculture announced that Chinese buyers had booked deals for 378,000 tonnes of soybeans from the United States.

China said on Wednesday that tariffs should not be used as retaliation after President Donald Trump threatened the country over its handling of the novel coronavirus.

Optimism that corn-based ethanol plants might reopen helped futures from backsliding too much, as the U.S. Energy Information Administration reported increased ethanol production for the first time since March 4, while ethanol stocks trimmed 725,000 barrels.

“Plants are reopening again,” said Jim Gerlach, president of A/C Trading. “You’re likely to see a yo-yo. Plants will retool, they’ll outpace demand. Then stocks will build, then they’ll have to slow down again until equilibrium is found.”

Many remained skeptical about how quickly livestock-processing facilities would reopen, as worker shortages and fears of coronavirus infection keep plants below capacity.

“They’re not opening up very fast,” said Gerlach. “You can’t overcome the demand side of the ledger right now.”

— Reporting for Reuters by Christopher Walljasper; additional reporting by P.J. Huffstutter in Chicago, Gus Trompiz in Paris and Naveen Thukral in Singapore.

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